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The History and Future of E-Commerce Patents

Dennis D. Crouch and Mitchell L. Terry

©2015. Published in Landslide, Vol. 7, No. 5, May/June 2015, by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association or the copyright holder.

The past two decades have seen a great rise in the patenting of e-commerce inventions. Now, those same patents are taking an equally great fall. In a series of four recent cases, the U.S. Supreme Court has shifted the doctrine of patent eligibility and, in the process, raised the bar for e-commerce and software patents—making it more difficult to obtain and enforce those types of patents. Although there is no affirmative bar against patenting these business-focused inventions, the expanded “abstract idea” approach creates significant hurdles. Pointedly, if reviewed under the new doctrine, we expect that several hundred thousand already-issued patent claims would be found lacking patentable subject matter. Because the Supreme Court eligibility decisions are applied retroactively to already-issued patents, the result is that these patents have been implicitly rendered unenforceable. And, in many cases, we would expect that attempts at enforcement would lead to sanctions or an award of attorneys’ fees.1 This loss of entitlement represents a significant financial loss for the patent holders. However, Ronald Coase’s work should remind us that the change creates new value and new entitlements for those who would use the ideas previously restricted by patent rights.2 Looking forward, the patent office and courts are struggling to apply the new doctrine in a principled manner, while innovators and operating companies are shifting business plans to better take advantage of the new regime.

 

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